Tax Hikes

Pressure builds on Saxby Chambliss


Facing a backlash from grassroots activists just a few days after saying denouncing the pledge he once made to protect Georgians from tax hikes, Sen. Saxby Chambliss (R-GA) and staffers tried to play damage control yesterday.

Just before Thanksgiving, Chambliss filled in a Georgia-based television station on some of the “fiscal cliff” negotiations. When asked if he was worried that violating Americans for Tax Reform’s Taxpayer Protection Pledge may be used against him in a potential primary, Chambliss responded, “I care more about my country than I do about a 20-year-old pledge.” Chambliss also took aim at Grover Norquist, president of Americans for Tax Reform, saying, “If we do it his way, then we’ll continue in debt, and I just have a disagreement with him about that.”

“If we do it his way, then we’ll continue in debt, and I just have a disagreement with him about that


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Republicans have shredded their credibility in the “fiscal cliff” debate

Eric Cantor

Many Republicans are backing away from their pledge not to raise taxes on constituents as they try to work out a deal on the so-called “fiscal cliff.” During an interview on MSNBC, House Majority Leader Eric Cantor (R-VA) said, “I will tell you when I go to the constituents that have elected, re-elected me it is not about that pledge. It is really about trying to solve problems.”

The Americans for Tax Reform’s Taxpayer Protection Pledge has been much maligned in recent years, and has been a favorite target of the White House and Democrats. They’ll take shots at the pledge, claiming that Republicans are taking marching orders from Grover Norquist, president of ATR. Democrats do this to make Republicans look like they’re beholden to a special interest.

The Taxpayer Protection Pledge simply states that the candidate will “oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses” and “oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.” Essentially, a candidate or elected official promises not to support a net-tax hike. This pledge is not made to Grover Norquist, Americans for Tax Reform, or Republican leadership in Congress. It’s made to taxpayers inside that candidates district or state.

Investment falling as businesses anticipate economic problems


While House Republicans have made it a priority to protect business owners during negotiations over the so-called “fiscal cliff,” there are signs that investment as businesses seeing more economic problems coming:

U.S. companies are scaling back investment plans at the fastest pace since the recession, signaling more trouble for the economic recovery.

Half of the nation’s 40 biggest publicly traded corporate spenders have announced plans to curtail capital expenditures this year or next, according to a review by The Wall Street Journal of securities filings and conference calls.
Corporate executives say they are slowing or delaying big projects to protect profits amid easing demand and rising uncertainty. Uncertainty around the U.S. elections and federal budget policies also appear among the factors driving the investment pullback since midyear. It is unclear whether Washington will avert the so-called fiscal cliff, tax increases and spending cuts scheduled to begin Jan. 2.

Companies fear that failure to resolve the fiscal cliff will tip the economy back into recession by sapping consumer spending, damaging investor confidence and eating into corporate profits. A deal to avert the cliff could include tax-code changes, such as revamping tax breaks or rates, that hurt specific sectors.

The Wall Street Journal does explain that the economy could see a boost when and if a deal is made to avoid the “fiscal cliff.” Don’t take that as a sign of approval from businesses and investors, but rather sign of them knowing what exactly they’re dealing with moving forward.

Raising taxes will not prevent economic problems

United States Capitol

Negotiations over the so-called “fiscal cliff” are back in full swing, but the White House and congressional leaders are no closer to an agreement on taxes and spending cuts. Just before Thanksgiving, House Speaker John Boehner told ABC News that he wants ObamaCare, President Obama’s signature domestic policy, put on the table during “fiscal cliff” negotiations. Republicans are also pushing for more transparency in the deal-making process, urging their leadership to put everything out in the open.

Boehner has been pushing the idea of pro-growth tax reform that doesn’t raise rates. That seems like a non-starter since White House and Senate Democrats have made it clear that they want to raise rates for higher-income earners. And unfortunately, some Republicans in Congress are getting anxious about a deal and are abandoning their pledge to constituents not to raise their taxes.

Raising taxes in this economy is a bad idea. Just two years ago, President Obama supported extending tax rates for another two years because he realized that the economy would struggle even more if tax rates suddenly changes. The economic climate isn’t much better today.

Michael Tanner, a senior fellow at the Cato Institute, recently explained that raising taxes on the rich isn’t going to balance the budget:

Carbon Tax Follies

Written by Chip Knappenberger, Assistant Director of the Center for the Study of Science at the Cato Institute. Posted with permission from Cato @ Liberty.

There seems to be a noticeable murmur around town about a carbon tax—a tax on the amount of carbon dioxide that is released upon generating a unit of energy. Since fossil fuels—coal, oil, natural gas—are both the source of over 75% of our energy production and emitters of carbon dioxide when producing that energy, a carbon tax insures that the price of everything goes up.

There is one and only one justification for a carbon tax—an attempt to influence the future course of the earth’s climate (or, as some people prefer, to mitigate anthropogenic climate change) by trying to force down the emissions of the most abundant human-generated greenhouse gas.

But of all the things that a carbon tax will do (raise prices, increase bureaucracy, elect Tea Partiers, etc), mitigating anthropogenic climate change in any meaningful manner is not one of them.

The annual carbon dioxide emissions from the U.S., currently about 5,500 million metric tons per year, only contributes roughly 0.003°C/per year of warming pressure on global temperatures (see here for a handy way of making that calculation). So the best that a carbon tax could ever hope to achieve, climatically, would be to prevent this amount of warming each year by completely eliminating all carbon dioxide emissions from the U.S.

Debt ceiling talks open, can may be kicked into 2013

John Boehner and Barack Obama

On Friday, President Barack Obama sat down with congressional leaders, including House Speaker John Boehner, to discuss avoid the so-called “fiscal cliff,” automatic tax hikes that would come from the expiration of the 2001 and 2003 tax cuts and spending cuts that were signed into law last year as part of the debt ceiling deal.

All sides left the table believing that a deal was possible, though it doesn’t seem like they’re going to have time to get something comprehensive done by the end of the year:

In a signal to financial markets that have fallen precipitously since Obama’s election last week, Speaker John Boehner (R-Ohio), House Minority Leader Nancy Pelosi (D-Calif.), Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.) expressed confidence they would reach a deal.

The four all appeared outside the White House after the meeting as a group to telegraph their seriousness and unity to the markets and the public.

“We all know something has to be done … we feel very comfortable with each other and this isn’t something we’re going to wait until the last day of December to get it done,” Reid (D-Nev.) said. “We have a plan. We’re going to move forward on it.”

Boehner said the parties had developed the “cornerstones of being able to work something out.”
Democrats, meanwhile, expressed a willingness to consider spending cuts despite heavy lobbying from union and senior groups, who argue Medicare and Social Security should not be touched.

Bill Kristol and Taxes

Written by Marian Tupy, a policy analyst, Center for the Global Liberty and Prosperity at the Cato Institute. Posted with permission from Cato @ Liberty.

It has been said of the neo-cons that they are often wrong but never in doubt. Well, Bill Kristol was at it again, predicting the future with his usual sense of supreme confidence.  According to the neo-conservative editor of the Weekly Standard, “It won’t kill the country if Republicans raise taxes a little bit on millionaires… .The Republican Party is gonna fall on its sword to defend a bunch of millionaires, half of whom voted Democratic, and half of whom live in Hollywood and are hostile to Republicans.”

The left has jumped on Kristol’s words. As Andrew Rosenthal wrote in the New York Times, “When even Bill Kristol, the severely conservative Weekly Standard editor, says Republicans should agree to raise taxes on the richest Americans, you have to wonder if the G.O.P. has thought through its post-election, hold-the-line strategy.”

To start with, Kristol misunderstands the opponents of the tax increases on the rich, whose main goal is not to ensure that the rich get to keep more of their money. Their main goal is to prevent the federal government from obtaining a new source of revenue. Why might that be?

Dan Mitchell on the Fiscal Cliff and Tax Hikes

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“Fiscal cliff” talks to open with a call for a $1.6 trillion tax hike

Barack Obama

During a press conference yesterday afternoon, President Barack Obama laid out some of his terms on the so-called “fiscal cliff,” making it known that he wouldn’t accept a deal with House Republicans that didn’t raise tax rates on higher-income earners. Before the press conference even took place, the White House had rejected House Speaker John Boehner’s initial offer and The Hill noted that Obama would come to the table asking Congress for “$1.6 in new revenues by targeting the wealthy and corporations.”

Boehner, who has said that the talks with the White House are “going to take awhile,” has already said that House Republicans aren’t willing to raise tax rates, which could bring the talks to an impass. During the press conference, Obama said, “I’m open to compromise and I’m open to new ideas.” But, as noted, Obama has already turned away one offer for increased revenues and isn’t likely to budge much from his position.

James Pethokoukis noted that Obama’s tax plan, which supposedly brings a “balanced approach” to the deficit, isn’t balanced (emphasis mine):

[O]nce you begin to dig into the numbers, the plan doesn’t look balanced at all. As the bipartisan Committee for a Responsible Federal Budget noted back then:

Ron Paul: 0% Chance Of Grand Bargain Over Fiscal Cliff

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